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PacBio Plans Sequel Upgrades, Will Sunset RSII in 2021


SAN FRANCISCO (GenomeWeb) – Pacific Biosciences said this week that it is planning another chemistry and software upgrade to its Sequel instrument this fall, which will boost read lengths and yield per flow cell.

In addition, the firm plans to stop supporting its older system, RSII, by 2021, and has instituted a trade-in program for customers to convert to Sequel.

PacBio CEO Mike Hunkapiller discussed these plans during a conference call with investors this week detailing the firm's second quarter 2018 earnings.

Hunkapiller said that the firm decided to phase out the RSII completely because after the latest upgrade to Sequel, customers began switching over more rapidly and the RSII systems are now starting to age. Sequel instrument and consumable sales are now more than 80 percent of PacBio's business, Hunkapiller said, and there are around 275 Sequel instruments installed worldwide. And, with upcoming upgrades to the Sequel and the planned new chip, it did not make sense to continue supporting the RSII, he said.

PacBio previously upgraded Sequel chemistry and software in the first quarter of this year and Hunkapiller said that the newest upgrade, planned for October, would have an even bigger impact on the system's performance.

Hunkapiller said that in internal experiments, the new chemistry has resulted in average read lengths nearing 100 kilobases and a yield per SMRT cell of more than 40 gigabases. In addition, he said, both raw read and consensus accuracy have improved.

"This substantial increase in performance has the potential to open up new opportunities" for Sequel, he said. Not only will it be beneficial for customers on applications such as de novo assembly, isoform sequencing, and structural variant analysis, he said, but it will also start to make Sequel an attractive instrument for use in larger-scale population sequencing studies.

Hunkapiller said that the company plans to start beta testing the latest release with early customers later this month, ahead of a wider release in October.

In addition, as the firm has previously said, it has been developing the next version of its chip, which will increase the number of zero-mode waveguides from 1 million to 8 million, resulting in an even more substantial improvement in performance.

Hunkapiller said that the firm is on track to complete development of the new chip by the end of the year and will begin beta testing with customers in early 2019. Initial internal tests of that chip, he said, have resulted in 200 gigabases of data per run.

Once the new chip is launched, customers will also need to upgrade the instrument itself, Hunkapiller said. The current computer on the Sequel will not be adequate to support the throughput increase and the system connection to the chip will also be slightly different. However, he noted that customers won't have to purchase an entirely new machine.

The ultimate goal of the upgrades and the new chip launch are to drive down the cost of sequencing on the Sequel so that it can be used in a broader range of applications and compete with short-read sequencing technologies from the likes of Illumina. In particular, the firm is eyeing population sequencing projects, many of which are just getting started.

Currently, the "vast majority of population sequencing [projects are] using short reads because of the cost differential," Hunkapiller said. But "once we can demonstrate that a high-quality PacBio analysis of the human genome can be performed at comparable cost, we anticipate seeing larger cohorts of population sequencing samples shift over to PacBio."

Illumina is also pursuing large-scale population sequencing projects and reported earlier this week that it is hoping to supply sequencing for several such initiatives like the National Institutes of Health's All of Us project, the UK Biobank, a project with Genome Canada, and one with the Australian government. Given that Illumina has already successfully supplied sequencing for the UK's 100,000 Genomes Project, which will wrap up this year, PacBio has an uphill battle to gain a foothold in the population sequencing market.

Nonetheless, William Blair analyst Amanda Murphy was optimistic about PacBio's potential in this space. Although the investment bank noted that PacBio "continues to be a 'show me' story," Blair wrote in a note to investors that it is encouraged by the progress toward the new chip, "which is expected to provide a meaningful reduction in cost per gigabase," down to around $1,500 per genome at 50X coverage, she wrote.

"The potential for the Sequel to be incorporated into large-scale population studies and other human-based applications with the cost reductions provided on the new chip is potentially game changing," Murphy added.

Bill Quirk, senior research analyst at Piper Jaffray, was also optimistic about the upcoming new chip, writing in a note to investors that it "could be a solid growth driver in future years as it has the potential to significantly reduce the cost of PacBio sequencing." He noted, however, that there could be a slowdown in near-term adoption of PacBio technology from customers who are waiting for the new chip before purchasing a Sequel.

Previously, PacBio had said it was looking for a partner to expand into the clinical and diagnostics market and earlier this year, Hunkapiller said the firm was in discussion with several parties in China.

Hunkapiller did not provide an update on that progress, but did say that the firm continues to expand its presence in China. Currently, 30 percent of its Sequels are installed in China.